Blue Star

Blue Star Limited reported a consolidated revenue of RS.4,072 Crore for Q4 FY26, marking a 1.3% year-over-year growth. The EBITDA margin for the quarter improved to 8% from 7% in Q4 FY25. For the full fiscal year 2026, consolidated revenue grew 3.6% to RS.12,402 Crore, with EBITDA increasing by 6.2% to RS.930.4 Crore. However, PBT before exceptional item^📎s for FY26 de-grew 3.9% to RS.741.9 Crore, and net profit declined 4.3% to RS.527.3 Crore, with net profit as a percentage of revenue at 4.3%.

Segment 1 (Electromechanical Projects and Commercial Air Conditioning) recorded a 1.1% revenue growth in Q4 FY26 to RS.1,989.9 Crore, but its segment result margin decreased to 6.5% from 7.6% in Q4 FY25. Conversely, Segment 2 (Unitary Products) saw a 1.3% revenue growth in Q4 FY26 to RS.1,985 Crore, with a notable improvement in its segment result margin to 10.4% from 8.4% YoY, attributed to cost rationalization and prudent pricing. Segment 3 (Other) grew 7.3% in Q4 FY26 to RS.97.18 Crore, with its margin at 14.7%.

The company's consolidated carried forward order book stood at RS.6,923 Crore as of March 31, 2026, reflecting a 10.5% growth year-over-year. Order inflow for Segment 1 in Q4 FY26 increased by 35.7% to RS.1,954.39 Crore. The data center MEP business is identified as a significant growth driver, with an estimated market size of RS.3,500 Crore. Blue Star's current order book in this segment is approximately RS.1,500 Crore, with the potential to double its annual revenue contribution from RS.1,000 Crore to RS.3,000 Crore within the next three years.

The summer season commenced effectively on April 13th, leading to a pickup in secondary sales of room air conditioners. Management estimates current dealer field inventory at 45-60 days, which could be liquidated rapidly within 20 days if the summer remains active for another 8 weeks. The company expressed confidence in its inventory management strategy for the current year, noting that moderated production in anticipation of summer delays has positioned them better than the previous year.

Blue Star has implemented an 8% price increase, with an additional 5% expected in May-June billings, to cover a warranted 13% increase driven by BEE norm changes, raw material costs, and exchange rates. Despite these efforts, management anticipates continued margin pressure throughout FY27 due to volatile commodity prices and intense competition. The company aims to maintain Segment 1 margins at 7-7.5% and Segment 2 margins at 8-8.5% for the year.

The room air conditioner market in India is projected to be the fastest-growing globally, with expectations to more than double by 2030, reaching 40-50 million units from the current 17.5 million units. Blue Star's Sri City factory is currently operating at close to 100% capacity, producing around 9 lakh units annually. To meet anticipated demand, the company plans to decide by October on expanding another manufacturing line, having postponed this decision from the previous year.

Blue Star is strategically pursuing international business as a Contract Design and Manufacturing (CDM) partner for other OEMs, rather than entering markets with its own brand or through joint ventures. While the US market is currently stagnant and Europe is slow, the company has secured approvals for several products and customers. Management expects this segment to begin contributing significantly to revenue in about three years, contingent on the global economic environment.

FY26 was characterized by multiple headwinds, including a weak summer season, the impact of GST reduction announcements, and ongoing trade war-related supply chain disruptions. Looking into FY27, the company anticipates continued challenges from rising input costs, volatile exchange rates, and geopolitical uncertainties, particularly the Middle East crisis, which could disrupt supply chains and dampen growth. Regulatory uncertainties in the MedTech Solutions business also remain a concern.